Austria To Scrutinize Bank Tax Arrangements

by Ulrika Lomas, Tax-News.com, Brussels

12 November 2010

Austria’s Chancellor Werner Faymann has issued a blunt warning to the country’s banks that the government plans to keep a very watchful eye over the institutions to ensure that they adhere to their promises not to pass the bank levy on to their customers.

Emphasizing the fact that the government is committed to introducing the bank levy in order to consolidate the country’s budget, Chancellor Faymann underlined the fact that much had been done to rescue the banks during the financial crisis and to assume liability for savings deposits. A bank levy is therefore justifiable, Faymann argued.

According to Faymann, the banks had already provided their assurances during the course of earlier budgetary negotiations not to pass the bank levy on. Faymann warned that they should not now threaten to do so. The government, he added, is therefore watching meticulously to ensure that no such arrangements are made. Other opportunities for banks to save exist in any case, Faymann stressed.

Austria’s Finance Minister Josef Pröll emphasized that the EUR500m bank levy was unavoidable if the savings targets contained in the country’s draft budget were to be met. Pröll alluded to the fact that issuing banks had not ruled out the idea of passing costs on, but had stipulated that the impact would be negligible. In addition, the abolition of the credit agreement fee – amounting to an annual EUR150m – would serve to reduce the burden on borrowers.

These latest statements issued by both the Chancellor and Finance Minister follow hot on the heels of recent remarks from Walter Rothensteiner, Head of Austria’s Raiffeisen Zentralbank (RZB bank), who warned that the government’s proposed bank tax and plans to tax share profits will inevitably result in higher costs for customers, in one form or another.

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